The term "independent agency" has multiple definitions. Sometimes it is used to mean a free standing agency. Under that definition, the EPA is an independent agency because it is not buried in another department. The IRS is not an independent agency because it is in the Department of Treasury. This definition is mostly a matter of geography and says nothing about the powers of the particular agency.

The term also, however, has a constitutional significance. There are agencies that are "independent" because they are "independent" of the President. Independence can come from a variety of powers given to an agency that allow them to act without consulting those in the White House (Justice Breyer lists some of them in his dissent in the PCAOB case).

But in truth there is only one attribute that truly matters for purposes of independence and that is the limitation on the President's ability to remove agency heads "for cause." To the extent that an agency head cannot be removed at will, the agency head has greater independence and at least sometimes can deflect political considerations in making policy.

The Independent Agency Regulatory Analysis Act of 2012 provides that the President can, by executive order, regulate the rulemaking process of "independent" agencies. Independent is defined as those agencies listed in 44 USC 3502(5). The agencies listed in this section include:

the Commodity Futures Trading Commission, the Consumer Product Safety Commission, the Federal Communications Commission, the Federal Deposit Insurance Corporation, the Federal Energy Regulatory Commission, the Federal Housing Finance Agency, the Federal Maritime Commission, the Federal Trade Commission, the Interstate Commerce Commission, the Mine Enforcement Safety and Health Review Commission, the National Labor Relations Board, the Nuclear Regulatory Commission, the Occupational Safety and Health Review Commission, the Postal Regulatory Commission, the Securities and Exchange Commission, the Bureau of Consumer Financial Protection, the Office of Financial Research, Office of the Comptroller of the Currency, and any other similar agency designated by statute as a Federal independent regulatory agency or commission;

The definition also includes the Federal Reserve Board but the legislation specifically exempts the Fed from its requirements.

For the most part, these agencies have commissions or agency heads that can only be removed for cause, although there is considerable variation. The OCC enabling act, for example, provides that the Comptroller may be removed "upon the reasons" communicated by the President to the Senate. See12 USC 2. The SEC commissioners are treated as removable only for cause but the enabling statute does not actually say that (it does provide for five year terms). See Section 4 of the Exchange Act, 15 USC 78d (also requiring that no more than three commissioners be from the same political party).

As a result of this limitation on presidential removal authority, the general view is that these agencies are less subject to political influence. Moreover, in the folklore of administrative law, there is a view that Congress has a greater proprietary interest in the independent agencies. Commissions (like the SEC) must have representation from more than one political party. And the parties in Congress are keen to make sure that, in appointing commissioners, their views are represented. The presence of genuine representatives of both parties can reduce the influence of the President.

The Independent Agency Regulatory Analysis Act of 2012, therefore, does two things. First, it increases the potential for politicizing the rulemaking (and policy making) process of the listed agencies. Whether the SEC and the securities markets, or the OCC/FDIC and banking policy, or the NRC and nuclear power policy, these matters will be susceptible to greater political intrusion. OIRA and its so called "nonbinding" assessments will provide plenty of room for interference. Moreover, the exception in the legislation for the Fed shows that the sponsors understood that this could occur and at least sometimes thought it a bad idea. There is no explanation, however, why this exception was applied only to one agency.

Second, it is, frankly, a give away of authority from Congress to the President. In truth, the President can probably already subject independent agencies to rulemaking oversight. The issue is constitutional. In the past, the courts viewed the independent agencies as outside the executive branch (in the interstices between the branches if you can believe that).

After Morrison v. Olson, 487 US 654 (1988), it is relatively clear that the independent agencies are in fact in the executive branch. As a result, there is a very strong argument (but not one completely free from doubt) that the President can, absent affirmative prohibitions in the statute, subject all executive branch agencies to a common set of rulemaking policies, including those designated as independent.

Indeed, past Presidents have concluded that they have the authority to do so. See Richard H. Pildes & Cass R. Sunstein, Reinventing the Regulatory State, 62 U. Chi. L. Rev. 1, 28 (1995) ("Under President Reagan, the Department of Justice concluded that the President had the legal authority to extend the orders [imposing centralized control over the regulatory process of independent agencies]"). They have not done so, however, at least in part for political reasons. SeeId. ("President Reagan declined to include the independent agencies within the requirements of his two executive orders. In part, this appears to have been a political judgment. The Democratic Congress, skeptical of the executive orders in general, might well have been outraged by an assertion of presidential authority over the independent agencies, which Congress often considers 'its own.'").

This legislation will resolve the issue. It is true that the legislation removes any remaining legal uncertainty about the President's authority to subject these agencies to rulemaking oversight. But mostly what it does is give the President permission to exercise the same level of control over independent agencies that it does over traditional executive branch agencies. In exercising the judgment, Presidents will not need to worry any more about legislative outrage in asserting increased control over these agencies.